Sizing up the deal:
After a Wall Street Journal article floated rumors that both One Communications, Fibernet and KDL (Kentucky Data Link) were on the auction block, nTelosS (Nasdaq: NTLS) moved to purchase FiberNet from One Communications for about for about $170 million.
...the acquisition of FiberNet gives the wireline side of (nTelos) an even larger fiber network to address potential wireless backhaul and enterprise service opportunities in its respective regions.
What's significant about it?
For nTelos, a regional ILEC that recently decided to split up its operations into separate wireline and wireless businesses, the acquisition of FiberNet gives the wireline side of the house an even larger fiber network to address potential wireless backhaul and enterprise service opportunities in its respective regions.
FiberNet was one of the first casualties of the now defunct One Communications. FiberNet was swept up into One Communications when it was formed during the merger of CTC Communications and Choice One Communications--which included a deal to acquire FiberNet's parent Conversent Communications in 2006.
By acquiring FiberNet, nTelos added about 3,500 route fiber network miles that cover all of West Virginia and into surrounding areas in Ohio, Maryland, Pennsylvania, Virginia and Kentucky.
Of course, completing the deal didn't come without its challenges as nTelos had to deal with protest from fellow ILEC Frontier Communications (NYSE: FTR) over concerns around interconnection agreements in their West Virginia region. Ultimately, nTelos prevailed and closed the deal last December.
nTelos' acquisition of FiberNet is not the first time the ILEC has gone to the acquisition well to expand its wireline fiber network reach. In October 2009, nTelos acquired a large portion of Allegheny Energy's fiber assets, a move that instantly doubled its fiber network from 2,300 to 4,500 route-miles.
As nTelos completes the process of spinning off its wireline business into a separate publicly-traded company that it's referring to as "The New Wireline Company," the fiber network will serve as a key asset to both its traditional ILEC and CLEC businesses.
These additional assets will help serve both its traditional RLEC side and growing CLEC units alike.
The fiber assets to backhaul traditional voice and its growing base of wholesale transport, IP-based business services to enterprises (Metro Ethernet) in addition to residential services such as IPTV.